Just released the video of my participation on the JD Power Automotive RoundTable http://tinyurl.com/6khtlx 3 wks ago in Vegas
We’ve all been there. You just made the decision to purchase a new car. You’ve finally come to terms with having car payment for the next four to six years. You may even be feeling sick at this point as you get ready to sign the paperwork.
And no sooner than you sit down, you’re hit with the infamous sales pitch that goes a little something like this: “Will you be purchasing an extended service plan —because if you don’t take advantage of our offer TODAY, the price will double or even triple when you go to buy it later….”
Then you panic.
As a former finance and insurance manager, I can spot that panic from a mile away. But I also know what it’s like to be in your shoes as a consumer.
So is there any truth to the manager’s insistence that you have to buy a warranty at the time of sale?
Honestly, it depends.
In most cases, the warranty cost will not significantly jump within the first 12 months/12,000 miles that you own the car. Therefore, if you are unable to buy a warranty at the time of sale, you can generally come back with a credit card down the road and still find a significant savings than if you wait until the expiration of your factory warranty.
However, there are a few situations where buying the warranty at the time of sale makes good financial sense for you, the consumer.
The number one reason to purchase your warranty at the time of sale is to include it in your monthly car payment. Comprehensive warranties can cost anywhere between $800- $2500. Therefore, it’s much easier to tack on an additional $25 a month to your payment than come up with one lump sum down the road.
You should also consider buying a warranty at the time of sale if you plan to keep the car for more than 3 years. Your business manager isn’t lying when he/she tells you the price can double or triple right before your factory warranty expires. If you have any doubts, ask the manager to quote the price for a car that already has 3 years/36,000 miles on it. You’d be amazed at the increase.
Finally, I’d highly recommend buying a warranty at the time of sale if your car is pre-owned. In most cases, dealerships sell “wrap” coverage that extends the remaining factory warranty or provides better coverage to match an existing powertrain warranty. Either way, these plans are discounted and you usually can’t come close to the price of a “wrap” after you decline the initial offer.
So based on the information above, it’s clear that buying an extended warranty at the time of sale isn’t for everyone- but it’s certainly not a gimmick either.
It’s up to you to evaluate your circumstances and plans for the vehicle. If you’re the type of person that keeps their cars and doesn’t have spare change laying around for a $2500 car repair, than budgeting an additional $25 in a payment is the way to go. Then again, if you buy cars like a woman buys shoes, forget it. Educate yourself on GAP insurance instead (because that’s definitely something you’ll need!)
The bottom line is, don’t be put off by the sales pitch. Yes, the dealer wants to make money, but some of the things they offer are for your good. To come to a site like MyDealerReport.com means you’re on the right track, so take the time to learn what products they are offering and what kind of savings you will get for immediately signing on the dotted line.
You may visit Amber’s personal blog at www.caringlegalservices.com
Is anything more derailing than getting into your car in the middle of an over scheduled hectic morning only to find that it just isn’t working? Whatever the problem seems to be, you sit there, behind the wheel, hands at 10 and 2, and you utter silent prayers to the car gods and you chant a little encouraging mantra to your stubborn vehicle, and then you close your eyes tight and hope that everything is going to be just fine when you try starting the car again. It never is.
So, there you sit, wondering what to do. After calling your spouse/parent/friend/boss to vent about your terrible luck, you finally realize you have to deal with the car. (If you’re me you call the closest dealer because one time an independent repair shop tried to swindle you out of a couple thousand dollars and you no longer want to take the risk.) You don’t call your usual dealer because they are really far away, and in any case, it’s all the same, isn’t it? So you call and make an appointment. You find a way to have your car towed and you wait for The Call.
You know The Call, right? The one where you discover just how bad the damage to your wallet is going to be? You wait impatiently to learn if you’ve won the busted car lottery: a cheap easy repair that can be done while you wait, or if the dealer is the big winner: horrible damage, exorbitant fee, and multiple parts that need to be ordered from the other side of the world.
I got into my car one hectic morning a few weeks ago and the steering wheel wouldn’t move. A bit of an issue since between home and my desired destination there were quite a few twists and turns. After going through the usual rigmarole I discovered that the total repair cost was going to be $1500. Ouch. We hesitated for a bit and then asked the dealer to go ahead with the repairs. Over a week later, bright and early on a Monday morning, we called to double check that the car was indeed ready and we headed over to pick it up.
I dropped off my husband and sped away with a cheery wave. Not 15 minutes later I got a frantic call from him. “The car is dead.” Not exactly what I’d expected to hear. Turns out a staff member had left the glove compartment open all weekend and the battery was completely drained.
Now, at this point you’re probably thinking, “Well, mistakes happen. Whatever.” And had the story ended here I would have wholeheartedly agreed. But of course it didn’t end there. Upon discovering the dead battery, the repairman acted as though my husband was responsible, despite the fact that the car had been on their lot for well over a week by this point. And then, when my husband asked what they planned to do about the situation, the man answered “Well, we can give you an estimate for a new battery.”
I’ll spare you the sordid details, but suffice it to say that my husband left in a rental car, courtesy of the dealership, and our car now sports a brand new battery. All that to say that dealerships are not all created equal. A little research conducted before handing over your keys might spare you a massive headache.